Holding onto client monies? Take care or face Disqualification


Failing to make sure that client monies are protected has, for some time, been a sure fire route to disqualification. Recently, a Director of a former letting agency business based in Hove has been disqualified from acting as a director for 10 years for failing to make sure that tenant deposits and rent payments collected in by the company were properly protected.

The company was placed into compulsory liquidation on 30 September 2013, on the petition of the Director in question, as the company was no longer able to pay the debts it owed.

Upon the subsequent investigation by the Insolvency Service, it was discovered that the Director had failed to make sure that the company complied with its statutory obligations, under provisions of the Housing Act 2004 and its relevant approved schemes. As a result, the Director had failed to safeguard tenant deposits and rent payments, collected in from at least 19 April 2007 onwards. Furthermore, the Director was also found to be responsible for causing the company to mislead the National Approved Letting Scheme, a regulatory body, by submitting false accounting information to them from at least 2010 onwards.

As with all statutory obligations, failure to comply will likely lead to disqualification. In this case, the enhanced period reflects both the breach of trust in respect of the Director’s failure to safeguard client monies but also the allegation of dishonesty in respect of false accounting to the regulatory body.

For further details or for advice on Director Disqualification matters generally, please contact Commercial & Dispute Resolution Partner, Matthew Howat on 020 7884 9700.

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